Best Small Cities to Live In

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Choosing where to live is one of life’s biggest financial decisions, and while big cities like New York and San Francisco get lots of attention, they may not fit everyone’s needs. So NerdWallet turned the spotlight on America’s vibrant small cities —communities that are not only thriving economically, but also are places that provide an affordable lifestyle for residents. These are some of the best places to live, with the vitality and growth of big cities combined with affordability and income equality.

Our analysis incorporated the following factors:

1. Is the city poised to grow in coming years? We included population growth, income growth and the decrease in poverty over a three-year period.

2. Is the city affordable for residents? To assess the cost of living, we included selected yearly costs associated with homeownership, divided by the median income for workers in the city.

3. Are residents’ basic needs covered? To ensure that all residents have a basic level of stability, we included the percentage of the population with health insurance coverage and percentage of people whose incomes are below the poverty line. This metric helps mitigate high income inequality.

Trends and takeaways:

These cities are geographically diverse with cities in our top 20 distributed across the Midwest, South and West.

The only underrepresented area is the Northeast — not a single city in the Northeast made our top 20.

Indiana, Washington and California all had two cities in our top 10.

California’s cities had a high cost of living and a high median salary to match.

1. Carmel, Indiana

Carmel residents earn relatively high median incomes — workers make an average of $53,228 a year — and incomes have grown by a whopping 15.5% over a three-year period. Poverty has decreased in recent years, with only 2.5% of the population falling below the poverty line. The city also took the No. 1 spot in our analysis of the best towns in Indiana for young families.

2. Friendswood, Texas

Friendswood is a fairly small town, with just under 29,000 residents over age 16 in 2012. The population has grown significantly in recent years, rising 15% over a three-year period. Meanwhile, the poverty rate dropped 2.9% over a three-year period, and fell to 1.7% in 2012.

3. Riverton, Utah

The smallest city in our top ten, Riverton had just under 26,000 residents over 16 in 2012. This close-knit community has a low cost of living, high health care coverage and an incredibly low poverty rate of 1.4%, the lowest in our top ten.

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Sammamish also made our list of the best cities in Washington for job seekers. This Seattle suburb’s population has grown nearly 15% over a three-year period. Although the city has a fairly high cost of living, incomes in the city also are high, with workers making median incomes of over $75,000, and the poverty rate is low at 2.1%.

5. Fishers, Indiana

Fishers is an affordable community with a low cost of living — the city’s monthly homeowner costs are the second-lowest in our top ten. Fishers also took the No. 2 spot in our study of the best towns for young families in Indiana. Family friendly activities abound in the area as well — this Indianapolis suburb offers recreational activities at the Geist Reservoir and plenty of golf courses.

6. Danville, California

Danville’s cost of living is high, but residents’ median salaries are the highest in our top 10. Danville also had the highest health care coverage of all the towns in our top 10. The Iron Horse Regional Trail, a regional multiuse trail, runs through the family friendly community’s downtown and serves as a popular spot for hikers and runners.

7. Richland, Washington

Located in southeast Washington, Richland had the lowest monthly homeowner costs in our top 10. This affordable community has seen population grow of almost 10% and income growth of more than 14% over a three-year period, and the poverty rate has dropped by 2.3% over that same time period, showing that the growth is helping all residents. Washington State University Tri-Cities sponsors a Startup Weekend that encourages entrepreneurship in the area.

8. San Ramon, California

San Ramon is one of the highest-earning cities in the U.S., and it also has a fairly high cost of living, as do most cities in the San Francisco Bay Area. The city had the highest population growth in our top 10 cities, seeing a whopping 44% increase over a three-year period. Despite the recent growth, the poverty level remains low at 2.6%. The city is home to the headquarters of Chevron and 24 Hour Fitness. San Ramon offers easy access to the outdoors, including the nearby Las Trampas Regional Wilderness and the Bishop Ranch Regional Preserve. The Arbor Day Foundation has classified San Ramon as a Tree City USA because of the city’s commitment to urban forestry.

9. Dublin, Ohio

A growing suburb of Columbus, Dublin is one of the best cities for job seekers in Ohio. The city has seen population growth of more than 10% over a three-year period, and the poverty rate remains low at 2.2%. The city features 1,000 acres of parkland and hosts the Memorial Tournament, which is part of the PGA Tour.

10. Woodbury, Minnesota

Woodbury’s low cost of living and high growth earned it a spot on our list. Woodbury has seen population growth of more than 13% over a three-year period, and the area’s poverty rate is low at 2.2%. Woodbury took the No. 1 spot in our analysis of the best places in Minnesota for job seekers, and the St. Paul-area town is family-friendly as well, housing 3,000 acres of parkland within the city.

Rank

City

Population growth 2009-2012

Income growth 2009-2012

Change in poverty rates

Yearly homeowner costs/median income for workers

2012 Percentage of population with health insurance coverage

2012 Percentage of population below poverty level

Overall small city score

1

Carmel, Indiana

20.0%

15.5%

-0.2%

0.4

95.3%

2.5%

82.9

2

Friendswood, Texas

15.1%

9.5%

-2.9%

0.5

92.6%

1.7%

82.4

3

Riverton, Utah

-0.1%

18.3%

-3.1%

0.5

94.4%

1.4%

82.2

4

Sammamish, Washington

14.7%

6.1%

-0.1%

0.4

97.4%

2.1%

82.1

5

Fishers, Indiana

12.4%

2.4%

-1.3%

0.4

93.0%

1.5%

81.8

6

Danville, California

5.5%

15.0%

-0.3%

0.5

97.8%

2.7%

81.0

7

Richland, Washington

9.9%

14.3%

-2.3%

0.4

93.0%

6.3%

80.3

8

San Ramon, California

44.0%

-3.5%

0.1%

0.6

94.2%

2.6%

79.9

9

Dublin, Ohio

10.2%

-2.6%

-0.1%

0.5

96.6%

2.2%

79.8

10

Woodbury, Minnesota

13.7%

-3.7%

-0.3%

0.5

95.6%

2.2%

79.7

11

Ankeny, Iowa

13.5%

-2.7%

0.0%

0.5

96.8%

2.9%

79.7

12

Foster City, California

10.3%

6.2%

-0.6%

0.6

95.9%

2.7%

79.6

13

Wildwood, Missouri

5.5%

11.7%

0.7%

0.5

96.5%

2.8%

79.3

14

Marana, Arizona

5.9%

-0.9%

-4.2%

0.5

91.9%

1.9%

79.3

15

Menomonee Falls, Wisconsin

5.3%

4.4%

0.1%

0.5

96.4%

1.7%

79.2

16

Upper Arlington, Ohio

5.5%

1.5%

-0.2%

0.5

95.6%

2.3%

79.1

17

Collierville, Tennessee

19.1%

-3.2%

-1.1%

0.6

94.8%

3.0%

79.0

18

Bartlett, Tennessee

17.1%

-9.1%

-1.4%

0.5

92.8%

2.3%

78.8

19

League City, Texas

27.8%

-1.6%

-0.5%

0.5

89.3%

3.1%

78.6

20

Noblesville, Indiana

24.2%

4.2%

-0.3%

0.4

91.0%

5.4%

78.6

Methodology

The overall score for each city was derived from each of these measures:

1. Growth: Population growth, income growth and change in poverty rate each comprised 11.1% of the overall score. A higher rate of population and income growth earned a higher score, and a larger decrease in poverty earned a higher score. The rate comes from the U.S. Census American Community Survey 3-year estimates.

2. Affordability: Selected yearly homeowner costs as a percentage of median worker income made up 33.3% of the total score. A lower percentage earned a higher score. This ratio is high in our study because we used the median income for one single worker, not for families, to standardize the values across similar households. Most homeowners don’t pay this percentage of their income toward housing costs. Both metrics came from the U.S. Census American Community Survey 3-year estimates.

3. Basic needs: Health insurance coverage and percentage below the poverty line each made up 16.7% of the total score. The data was from Census figures.

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